Some people think these terms refer to the same thing. Others believe they refer to different things but that the differences don’t matter. Then there’s the fact that certain sales apps actually use terms like lead, prospect, and opportunity to describe specific metrics.
In this article, we’ll give you the definitions of these three terms so that you know the differences between them. Then we’ll explain why these differences are important to understand. Finally, we’ll show you how to effectively move leads through your sales pipeline.
|Lead||An individual who could realistically buy something from your company but is largely unqualified|
|Prospect||A lead that has been qualified as a good fit for your product or service based on your ideal customer profile|
|Opportunity||A prospect who is legitimately interested in the products or services you sell and is one step away from becoming a customer|
The term “lead” refers to any individual who could realistically buy something from your company. It’s a broad definition, which is why leads sit at the very top of the sales funnel.
There are plenty of ways to generate leads. For example, you can peruse LinkedIn to find people who might be interested in your products. Or give away quality content in exchange for an email address to add to an email list. Or run social media ads. Or accept customer referrals. Or cold call.
Here’s the thing about leads: they’re largely unqualified.
That doesn’t mean every random person you meet is a lead. As mentioned above, a lead is someone who could realistically buy something from you. But, in all likelihood, a significant portion of your leads will not fit your ideal customer profile. If they did, they’d be prospects…
A prospect is a lead that’s been qualified.
To qualify a lead, you have to establish whether or not they’re a good fit for your product or service. To do this, you need to compare leads to your company’s ideal customer profile, i.e. a set of parameters that defines what the perfect patron of your business looks like.
Your ideal buyer persona might look something like this: An American woman in her mid-thirties who has two kids and an annual household income of at least $75k.
If you’re in the B2B space, your ideal customer profile might look more like this: A decision-maker at a U.S.-based Fortune 5000 company with a budget of $10k or more.
There are multiple ways to qualify leads. The easiest way is to talk to potential customers. Doing so will give you the opportunity to assess each lead’s needs and whether your products and services can meet them. You can also use online forms to learn important customer information.
An opportunity is a prospect who’s legitimately interested in the products or services you sell.
Just because someone fits your company’s ideal customer profile doesn’t mean they’ll actually buy something from you. They may not need your products or services. They may be happy with a competitor’s offerings. They might not be able to afford to get into business with you.
An opportunity is one step away from a customer. As such, they’re the most valuable when it comes to the lead vs. prospect vs. opportunity discussion and the ones you should spend the most time on. After all, they have the best chance of buying something from you.
We know what you’re thinking, “What’s the point? Does the distinction between leads, prospects, and opportunities really matter? It seems like semantics.”
The lead vs. prospect vs. opportunity discussion matters because each represents a different stage in the sales funnel. Because of this, leads, prospects, and opportunities deserve different levels of attention and should be handled in different ways.
Your sales funnel is a representation of the number of potential customers you have in each stage of your sales pipeline and the conversion rates at each stage.
A funnel is the visual representation of choice because you have the largest number of potential customers at the top of the funnel. As you move down the funnel and closer to making a purchase, the quantity of potential customers gets smaller as they get disqualified or decide not to make a purchase.
You can define your sales funnel stages in various ways. Often, they line up with the stages of your sales pipeline.
When it comes to leads, prospects, and opportunities, here’s where each type of potential customer exists in the sales funnel:
Keeping track of who’s a lead, prospect, and opportunity enables you to focus your efforts on the potential customers who are most likely to convert. This knowledge enables your sales team to use their time, energy, and resources efficiently and close more deals.
If that common lead becomes an opportunity, though, things change. At this point, you should do whatever it takes (within reason, of course) to convince this person to buy your product or service—even if that means preparing the aforementioned two-hour presentation.
Tracking leads, prospects, and opportunities through your sales funnel also enables you to keep your sales process organized. As long as you have a well-defined sales process, when your sales reps know which stage a contact is at, they know which actions they need to take to convert them.
You’ll have more success in sales when you can look at your pipeline and see who’s a lead, who’s a prospect, and who’s an opportunity because you’ll know how to proceed with each step of the qualification process.
Now that we’ve had the lead vs. prospect vs. opportunity discussion, let’s talk about converting one to the next.
To move a contact from the lead stage to the prospect stage, you’ll need to qualify them. When you qualify a lead, you determine that they’re a good fit for using your product or service.
Are there specific things you can do to turn leads into prospects? Absolutely! Here are a few ways to qualify leads and push them farther down the sales funnel:
Prospects are qualified leads. How do you qualify a lead? It’s pretty simple: you compare them to your company’s ideal customer profile (ICP), which describes the attributes of the people or companies that are your most valuable customers.
If you haven’t created an ICP yet, today is the day. We suggest starting on this ASAP because it’s essential to your success in sales!
Here’s a quick rundown of the process:
Lead qualification requires data. Fortunately, there are a few easy ways to acquire this data.
As mentioned earlier, you can simply talk with your leads to learn about their needs, company size, budget, etc. You can then compare this information to your ICP to see if there’s a fit.
You can get this information from online forms and surveys, too. For example, you might allow website visitors to download your ebooks, whitepapers, and case studies for free—as long as they give you their email address in return and answer a few qualification questions.
You can also use software tools to qualify leads. Nutshell’s email marketing feature, for instance, will tell you who’s opening and clicking on links in your emails. Hotjar will tell you how people interact with your website. And LinkedIn will tell you about the companies your leads work for.
You can compile all of this information together to paint a clearer picture of your leads. You can then use it to help determine which leads are ready to become prospects.
Lead nurturing is the process of developing relationships with potential customers.
If you do this with the leads in your pipeline, there’s a chance that some of them will become prospects. Why? Because they’ll see the content you produce, enjoy it, and qualify themselves by reaching out to your sales team for more information on your offerings.
So the question is, what kind of content should you produce? At this stage, we suggest crafting top-of-funnel (TOFU) content like blog posts, ebooks, podcasts, social media updates, YouTube videos, infographics, and email newsletters.
These content types are usually easy to create and have a wide reach, which means more of your leads will see and consume them, allowing you to generate more prospects in less time.
It’s great to have prospects. It’s much better to have opportunities. These three tips will help you convert more of the prospects in your pipeline to bonafide sales opportunities:
To recap, prospects are leads that match your ideal customer profile. As such, they’re much more likely to become paying customers than the average leads you collect every day.
That’s why we recommend taking time to talk to your prospects and forming a business relationship. Call them on the phone or shoot them an email. Learn about their pain points and daily challenges. Then show them how your company’s products can ease the burdens they’re carrying.
You can’t talk to every lead in your pipeline—and you wouldn’t want to. Your time is too valuable to spend on common leads. But prospects are different. Treat them as such.
Prospect nurturing is similar to lead nurturing, which we outlined above. But instead of developing initial relationships with leads, you develop deeper relationships with prospects.
Again, you can do this with content. Here are the main content types we suggest using to turn prospects into opportunities: webinars and other kinds of virtual events, quizzes and surveys, whitepapers, case studies, video tutorials, data sheets, and email sequences.
The best prospecting content educates prospects on the issues they have, the products and services you sell, and how your products can solve their problems.
Most of the prospects in your sales pipeline probably fall into the “not-yet-ready-to-buy” category. That’s okay. You just need to be patient.
If you commit to the nurturing process (see above) and continue to develop relationships with your prospects, many of them will buy from you in the future. Better yet, they’ll remain loyal to you and your company for the long term because you worked so hard to get to know them.
Patience, as they say, is a virtue. Don’t get so caught up in closing deals today that you neglect the deals you’ll close tomorrow, next month, and next year.
The lead vs. prospect vs. opportunity discussion can lead to a lot of confusion.
Fortunately, you now know the differences between these three terms and why it matters. More importantly, you know how to convert leads into prospects and prospects into opportunities. This will make it much easier for you to close deals at a consistent clip.
Here’s one final piece of advice for you: invest in a piece of software that will help you track leads, prospects, and opportunities so that you always know where they are in your pipeline.
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